54. Award: 10.00 points

 

MC Qu. 9-54 The construction manager for ABC...

The construction manager for ABC Construction must decide whether to build single family homes, apartments,
or condominiums.  He estimates annual profits (in $000) will vary with the population trend as follows:
 
  Population Trend
Type Declining Stable Growing
Single Family 200 90 70
Apartments 70 170 90
Condos −20 100 220
Prior Probability 0.4 0.5 0.1
 
If he uses the maximum likelihood criterion, which kind of dwellings will he decide to build?

 Single family

m
e r as
 Apartments

co
 Condos

eH w
 Either single family or apartments

o.

rs e
Either apartments or condos
ou urc
The maximum likelihood strategy starts by identifying the most likely state of nature. In this case, the state of
o

nature "Stable" has the highest probability. Next, the strategy chooses the alternative that has the highest payoff
for this state of nature. In this case, "Apartments" has the highest payoff of 170 for the state of nature "Stable".
aC s
v i y re

References

Multiple Choice Difficulty: 2 Medium

ed d
ar stu

MC Qu. 9-54 The Learning Objective:

construction Describe and evaluate
manager for ABC... several alternative
criteria for making a
sh is

decision based on a
payoff table.
Th

This study source was downloaded by 100000829029605 from CourseHero.com on 07-22-2021 12:25:19 GMT -05:00

https://www.coursehero.com/file/39658047/Operations-Management-Homework-5pdf/
  
 55. Award: 10.00 points
 

MC Qu. 9-55 The construction manager for ABC...

The construction manager for ABC Construction must decide whether to build single family homes, apartments,
or condominiums.  He estimates annual profits (in $000) will vary with the population trend as follows:
 
  Population Trend
Type Declining Stable Growing
Single Family 200 90 70
Apartments 70 170 90
Condos −20 100 220
Prior Probability 0.4 0.5 0.1
 
If he uses Bayes’ decision rule, which kind of dwellings will he decide to build?

 Single family

m
e r as
 Apartments

co
 Condos

eH w
 Either single family or apartments

o.

rs e
Either apartments or condos
ou urc
The Bayes’ decision rule strategy begins with a calculation of the expected payoff for each alternative. The
o

strategy then chooses the alternative with the highest expected payoff.
 
aC s

Alternative Expected Payoff

v i y re

Single Family 132,000

Apartments 122,000
Condos 64,000
ed d

References
ar stu

Multiple Choice Difficulty: 3 Hard

sh is

MC Qu. 9-55 The Learning Objective:

construction Describe and evaluate
Th

manager for ABC... several alternative

criteria for making a
decision based on a
payoff table.

This study source was downloaded by 100000829029605 from CourseHero.com on 07-22-2021 12:25:19 GMT -05:00

https://www.coursehero.com/file/39658047/Operations-Management-Homework-5pdf/
  
 56. Award: 10.00 points
 

MC Qu. 9-56 The construction manager for ABC...

The construction manager for ABC Construction must decide whether to build single family homes, apartments,
or condominiums.  He estimates annual profits (in $000) will vary with the population trend as follows:
 
  Population Trend
Type Declining Stable Growing
Single Family 200 90 70
Apartments 70 170 90
Condos −20 100 220
Prior Probability 0.4 0.5 0.1
 
What is the expected annual profit for the dwellings that he will decide to build using Bayes’ decision rule?

 $187,000

m
e r as
 $132,000

co
 $123,000

eH w
 $65,000

o.
 $55,000
rs e
ou urc
The Bayes’ decision rule strategy begins with a calculation of the expected payoff for each alternative. The
o

strategy then chooses the alternative with the highest expected payoff.
 
aC s

Alternative Expected Payoff

v i y re

Single Family 132,000

Apartments 122,000
Condos 64,000
ed d

References
ar stu

Multiple Choice Difficulty: 3 Hard

sh is

MC Qu. 9-56 The Learning Objective:

construction Describe and evaluate
Th

manager for ABC... several alternative

criteria for making a
decision based on a
payoff table.

This study source was downloaded by 100000829029605 from CourseHero.com on 07-22-2021 12:25:19 GMT -05:00

https://www.coursehero.com/file/39658047/Operations-Management-Homework-5pdf/
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